Pew reports 12.3% personal income growth in Washington, good, but below 14.4% national rate.

As the map from Pew above shows, Washington’s Q1 2020 – Q2 2021 personal income growth of 12.3% comes in below the U.S. growth rate of 14.4%, a somewhat surprising finding. The Pew report shows a country experiencing strong PI growth, robustly aided by federal spending.

More than half of states recorded their strongest personal income growth ever in the first quarter of 2021 as the economic recovery accelerated. Multiple rounds of pandemic-related government benefits drove year-over-year gains in every state, while earnings—the bulk of personal income—also edged up in most states. The sharp rise in total personal income will be temporary, however, as federal relief payments taper off.

In the first quarter of 2021, nearly all states recorded double-digit growth in total personal income compared with the same period a year earlier, when the abrupt March-April 2020 recession first derailed the economy. Utah (19.8%), Idaho (19.4%), and West Virginia (19.2%) experienced the sharpest increases. Nationally, the sum of residents’ personal income from all sources rose an inflation-adjusted 14.4%, the largest year-over-year growth rate since reporting of this key economic indicator began in 1948.

The key word at the end of the first paragraph is “temporary.” Washington’s growth may be tied, in part, to the fact that the state began on a higher plane. While Pew doesn’t address that directly in this brief account, the following suggests that the high growth rates in many states is a result of lower-performing economies benefiting from federal largesse.

  • After Utah, Idaho, and West Virginia, the sharpest overall gains were in Michigan and Mississippi (both 19.1%), while the smallest increases were in Wyoming (9.4%) and Connecticut and New York (both 9.5%).
  • States would not have enjoyed such growth if not for government assistance, which ballooned thanks to the influx of federal pandemic aid. In fact, 19 states would have experienced declines in total personal income if all sources of government assistance were excluded, although more than half of those would have incurred only slight declines of less than 1%.

Interesting.